The NegativesThe first chart covers the last 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.There is not much life in NY NH and it is lagging. 
The next chart is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH, in green, has been calculated with NASDAQ data.Ditto OTC NH 
The next chart covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of NASDAQ new highs divided by new highs + new lows (OTC HL Ratio), in red. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level (equal numbers of new highs and new lows). OTC HL Ratio rose, but remained in deeply negative territory. 
The PositivesNew lows disappeared last week. On the NYSE new lows declined from 369 Friday October 27 to 18 last Friday and on the NASDAQ they declined from 606 on Friday October 27 to 91 last Friday.The next chart is similar to the one above except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data. NY HL ratio to a modestly positive 54%. 
The next chart covers the last 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good). OTC NL moved sharply upward every day last week. 
The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.Ditto NY NL. 
Summation indices are running totals of oscillator values.Short term momentum indicators applied to summation indices make them nearly binary.The next chart covers the past 6 months showing the SPX in red and momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE. NYSE SI’s are all positive. 
The next chart is similar to the one above, except it shows the OTC, in blue, as the index and the SI’s have been generated from NASDAQ breadth data. Ditto OTC SI’s. 
SeasonalityNext week includes the 5 trading days prior to the 2nd Friday of November during the 3rd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for that period. OTC data covers the period from 1963 to 2022 while SPX data runs from 1953 to 2022. There are summaries for both the 3rd year of the Presidential Cycle and all years combined. Prior to 1953 the market traded 6 days a week so that data has been ignored.Average returns for the coming week have been mixed and weaker during the 3rd year of the Presidential Cycle than other years. Report for the week before the 2nd Friday of November.The number following the year is the position in the Presidential Cycle.Daily returns from Monday to 2nd Friday. OTC Presidential Year 3 (PY3) Year Mon Tue Wed Thur Fri Totals 1963-3 0.06% 0.00% -0.93% -0.20% 0.11% -0.96% 1967-3 -0.42% 0.00% -0.48% -0.62% 0.08% -1.45% 1971-3 -0.03% 0.28% -0.81% -1.07% 0.16% -1.47% 1975-3 0.32% 0.70% 1.63% -0.06% -0.30% 2.28% 1979-3 -0.56% -0.33% -1.12% 0.47% 0.81% -0.74% Avg -0.13% 0.21% -0.34% -0.30% 0.17% -0.47% 1983-3 -0.75% -0.57% 0.53% 0.77% 1.48% 1.46% 1987-3 -1.83% -1.64% 0.83% 1.95% -0.32% -1.00% 1991-3 -0.63% 0.25% 0.12% 1.08% 0.51% 1.32% 1995-3 -0.34% -1.71% 0.38% 1.69% -0.16% -0.14% 1999-3 1.34% -0.61% 0.99% 1.32% 0.74% 3.78% Avg -0.44% -0.86% 0.57% 1.36% 0.45% 1.09% 2003-3 -1.48% -0.56% 2.00% -0.29% -1.89% -2.21% 2007-3 -0.54% 1.07% -2.00% -1.92% -2.00% -5.39% 2011-3 0.34% 1.20% -2.00% 0.13% 2.00% 1.67% 2015-3 -1.01% -0.24% -0.32% -1.22% -1.54% -4.33% 2019-3 0.56% 0.02% -0.29% 0.28% 0.48% 1.06% Avg -0.43% 0.30% -0.52% -0.60% -0.59% -1.84% OTC summary for PY3 1963 – 2019 Avg -0.33% -0.17% -0.10% 0.15% 0.01% -0.41% Win% 33% 46% 47% 53% 60% 40% OTC summary for all years 1963 – 2022 Avg 0.00% 0.10% 0.01% 0.08% 0.09% 0.28% Win% 52% 60% 53% 55% 63% 53%
SPX PY3 Year Mon Tue Wed Thur Fri Totals 1955-3 0.43% 0.00% 1.04% 0.25% 1.16% 2.88% 1959-3 -0.17% -0.03% 0.02% -0.56% -0.56% -1.31% 1963-3 -0.51% 0.00% -0.87% 0.34% 0.41% -0.63% 1967-3 -0.33% 0.00% -0.37% 0.49% 0.68% 0.47% 1971-3 -0.07% 0.07% -1.11% -1.38% 0.00% -2.49% 1975-3 0.01% 0.59% 1.47% -0.16% -0.08% 1.83% 1979-3 -0.67% -0.61% -1.31% 0.43% 1.21% -0.96% Avg -0.32% 0.02% -0.44% -0.06% 0.55% -0.36% 1983-3 -0.33% -0.09% 1.37% 0.27% 1.14% 2.36% 1987-3 -2.00% -1.71% 1.21% 2.00% -1.16% -1.66% 1991-3 -0.27% -0.40% 0.32% 0.96% -0.21% 0.41% 1995-3 -0.36% -0.36% 0.92% 0.26% -0.09% 0.37% 1999-3 0.49% -0.85% 0.60% 0.58% 1.06% 1.88% Avg -0.49% -0.68% 0.88% 0.81% 0.15% 0.67% 2003-3 -0.58% -0.05% 1.15% -0.01% -0.76% -0.26% 2007-3 -0.50% 1.20% -2.00% -0.06% -1.43% -2.78% 2011-3 0.63% 1.17% -2.00% 0.86% 1.95% 2.61% 2015-3 -0.98% 0.15% -0.32% -1.40% -1.12% -3.67% 2019-3 0.37% -0.12% 0.07% 0.27% 0.26% 0.85% Avg -0.21% 0.47% -0.62% -0.07% -0.22% -0.65% SPX summary for PY3 1955 – 2019 Avg -0.28% -0.07% 0.01% 0.19% 0.15% -0.01% Win% 29% 36% 59% 65% 50% 53% SPX summary for all years 1953 – 2022 Avg 0.07% 0.10% 0.01% 0.11% 0.03% 0.30% Win% 57% 51% 58% 57% 58% 57% ConclusionLast weeks rally took the market from oversold extremes to overbought extremes. It will be a little while before we know if last week was a spectacular “dead cat bounce” or if the cat has another life.Seasonally the rest of the year has a positive bias.The strongest sectors last week were Utilities (for the 2nd week) and Banks while the weakest were Health care and Energy.I expect the major averages to be higher on Friday November 10 than they were on Friday November 2. Last weeks negative forecast was a miss.More By This Author:Technical Market Report For October 28, 2023 Technical Market Report For October 14, 2023 Technical Market Report For Oct. 14, 2023
